The two major objectives of this research project are (1) to develop improved national estimates of morbidity costs for a large number of specifically-defined illnesses and (2) to estimate the effects of economic conditions on the morbidity costs resulting from any given incidence and prevalence pattern of illnesses. The national estimates of morbidity costs will be based upon five years (1974-1978) of data from the Health Interview Survey and data from the Survey of Income and Education. These estimates will improve upon previous cost-of-illness studies in several important ways. First, they will include the costs of debility for persons who are able to work. Second, they will take account for other sociodemographic characteristics in addition to age and sex. Third, the illness categories used will be more specific and numerous than in previous studies. The analysis of economic conditions, also employing Health Interview Survey data, will estimate the effects of labor market conditions and transfer programs on the self-reported disability status and labor-force status of individuals with reported chronic conditions. Based on this analysis, we shall stimulate the changes in morbidity costs that would result from specified changes in these economic variables.